Lowball offers are an inevitable part of real estate. Nobody likes them, but they still come in.
As a real estate agent, it can be frustrating when your seller receives an offer way below the asking price. It can feel like the buyer isn’t serious or is simply testing the waters to see how desperate your client is.
However, lowball offers are more common than you might realize, especially in a competitive or shifting market like we’re in right now.
The good news is that a lowball offer doesn’t mean the deal is dead. With the right approach, you can turn these offers into opportunities for a successful negotiation.
Stay calm and avoid taking it personally.
One of the biggest mistakes home sellers can make when receiving a lowball offer is reacting emotionally.
It’s easy to get caught up in the frustration, especially when the offer seems insulting. However, it’s important to stay calm.
The buyer’s low offer doesn’t reflect on the value of the property itself — it’s just a starting point in the negotiation process. At the very least, they have some interest in your property.
While the offer may seem low, it could just be a tactic to feel out the seller’s flexibility.
By staying calm and not taking it personally, you create space for rational decision-making, which is critical for keeping the negotiation alive.
Understand the buyer’s motivation.
Before jumping to conclusions about the buyer’s low offer, take a step back and try to understand their motivation. Are they first-time homebuyers? Are they investors looking for a bargain? Or maybe the buyer is concerned about market conditions or repairs that need to be made.
Most buyer’s agents will let you know what they’re looking for and they might even shed some more light on their motives if they’re not careful.
Sometimes, the buyer might not have a full understanding of the property’s value, or they could be constrained by their budget. They might love the home, but it’s just outside of their pre-qualification.
By knowing more about their situation, you can better frame your counteroffer to meet their needs while protecting your interests.
Respond with a thoughtful counteroffer.
Rejecting a lowball offer outright can shut down negotiations prematurely. That’s not what we’re trying to accomplish.
Even if the initial offer feels unreasonably low, responding with a thoughtful counteroffer keeps the negotiations going. Remember, negotiations don’t cost anything.
The key is to craft a counteroffer that addresses the buyer’s concerns without giving too much away.
For example, if the buyer is worried about the cost of repairs, consider offering credit toward closing costs or specific repair concessions, but keep the price closer to your seller’s expectations.
Be sure to counter quickly. Delaying too long can give the impression that you’re not interested in negotiating. This could push the buyer to walk away entirely. Keeping the conversation flowing will maintain momentum.
Justify the asking price with data.
If you want to counter a low offer effectively, you need to arm yourself with data.
It’s okay to provide the buyer with solid evidence to back up your asking price. This can include recent comparable sales (comps), market trends, and any upgrades or unique features that increase the property’s value. Many real estate agents don’t do this, but it’s one way to go above and beyond.
When you counter, include a brief explanation of why the home is priced as it is.
For instance, if comparable homes in the neighborhood have sold at or above your asking price, explain this to the buyer. You could also mention how the home’s features make it stand out from other properties. It’s just touching on things the buyer might not have thought of.
By framing the asking price as grounded in market reality, you help the buyer see that the initial offer was unrealistic. It also gives them a reason to increase their offer without feeling like they are overpaying.
Look beyond price by considering the terms.
Sometimes, a low offer can be more palatable if the terms are right.
In real estate, price is just one piece of the puzzle. Closing dates, contingencies, and financing can also play a major role in the appeal of an offer.
If the buyer is offering flexibility on closing or waiving contingencies, for example, this might make a lower price more acceptable.
On the flip side, if the buyer’s offer is low but packed with contingencies, you may be able to negotiate better terms while still pushing for a higher price.
By focusing on the entire offer, rather than just the bottom-line number, you have more options.
Sometimes, a win on terms can offset a slight concession on price.
Know when to walk away.
Not every lowball offer is worth pursuing. We tend to see this with investors trying to get a good deal.
If the buyer refuses to budge, even after several rounds of counteroffers, it may be time to move on. One tactic is to make it clear to the buyer that the current counter is your final offer. Setting this boundary can sometimes prompt a buyer to increase their offer if they’re serious about the property.
However, if they still won’t come up, it’s okay to politely decline and let them go.
That a lowball offer isn’t the last offer you’ll receive, and holding out for a more reasonable offer may be the best course of action.
By showing that you’re willing to walk away, you can sometimes signal strength, which may lead to a better offer down the line.
Keep communication open.
Throughout the process, maintaining clear and respectful communication with the buyer’s agent is essential.
Negotiations can easily stall or fall apart if there’s a breakdown in communication. Always respond to offers and counteroffers promptly, and be transparent about your priorities.
By keeping the lines of communication open, you create an environment where the buyer feels comfortable continuing the conversation, even if the process takes longer than expected.
This open dialogue helps build trust and increases the chances of reaching a successful deal, even when starting from a lowball offer.
Lowball offers are inevitable.
Handling lowball offers can be challenging, but it doesn’t have to be a deal-breaker.
By staying calm, understanding the buyer’s perspective, and crafting a thoughtful response, you can keep negotiations alive and still get a favorable outcome.
Every offer, even a low one, is an opportunity to start a conversation, and with the right approach, you can turn it into a successful sale. Remember, real estate negotiations are a marathon, not a sprint.
Patience, strategy, and open communication are your best tools for navigating lowball offers effectively.
Lowball offers frequently asked questions.
You probably have a few more questions. Don’t worry; that’s why we’ve put together this FAQ to help you deal with lowball offers on your home.
What is considered a lowball offer on a house?
A lowball offer is typically 15-20% or more below the asking price. It can feel like the buyer is undervaluing the property, but it’s often just a starting point for negotiation.
How to politely decline a lowball offer?
Thank the buyer for their offer and respond with a respectful counteroffer. Use data to justify your price and highlight the property’s value without dismissing the offer outright.
Should I always counter a lowball offer?
Not necessarily. If the offer is insultingly low and the buyer seems unserious, it might be best to walk away. However, most lowball offers are just a negotiating tactic and worth countering.
Can a lowball offer still lead to a sale?
Yes, many lowball offers turn into successful sales. The key is to keep the negotiations going with a well-crafted counteroffer that addresses the buyer’s concerns.
How long should I wait to respond to a lowball offer?
Respond as quickly as possible. Delaying your response can make the buyer think you’re uninterested in negotiating, which could cause them to walk away. Keep the conversation flowing to maintain momentum.